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Philippine Airlines welcomes DOLE decision

3-Nov-2010 9:28 AM

Philippine Airlines confirmed (01-Nov-2010) it welcomed the decision of Labor Secretary Rosalinda Baldoz affirming an earlier ruling of the Department of Labor and Employment (DOLE) recognising the flag carrier’s prerogative to spin off its In-Flight Catering, Airport Services and Call Center units. PAL stated the decision provided additional separation pay and other benefits to staff affected by the job cuts, but it is yet to compute the financial impact of these modifications to the compensation package that each separated employee will receive. The carrier maintained that the planned spin off was done in good faith and justified by management’s prerogative to reorganise its corporate structure for the viability of its operations. It stated the PAL union had been aware of the planned spin off since 1998, but it was deferred as PAL Chairman Dr Lucio Tan tried to make PAL profitable amidst the difficult operating environment. So far only PAL’s Maintenance and Engineering department has been spun off, bought by Lufthansa Technik Philippines in 2000. PAL added a host of factors that include massive USD312 million losses in the last two years due to the global recession, volatile fuel prices, the US FAA’s downgrade of the Philippines’ aviation safety rating to Category 2, cut throat competition with low-cost carriers and other issues, forced PAL to find and implement radical ways to survive. [more]

  • Philippine Airline staff held further protests on 02-Nov-2010 against the decision, calling on Philippine President Benigno Aquino III to reverse the decision (AFP/Radio Australia News, 02-Nov-2010). PAL President Jaime Bautista called on the staff to respect the ruling. PAL Employees' Association (PALEA) President Gerry Rivera stated the union plans to sue PAL over the outsourcing plans and continue street demonstrations. Flight Attendants’ and Stewards’ Association of the Philippines (FASAP) stated it is “alarmed” by the decision (GMANews.TV, 02-Nov-2010);
  • President Aquino stated he will review the decision, stating he respect’s PALEA’s decision to appeal the decision;
  • DOLE stated PAL’s decision to outsource jobs is just one of many airlines worldwide have been forced to make to survive the global financial downturn. The department is now preparing a legal argument for the planned appeal case.

Philippine Airlines: “Despite the implementation of major cost control strategies and cash generation initiatives, PAL was still way short of its goal to keep the company afloat. Hence, PAL crafted a comprehensive plan which includes restructuring and spin off as key initiatives for survival. As a purely private enterprise, PAL receives no financial assistance – not even concessional loans – from the Philippine government. As correctly pointed out by Secretary Baldoz’s decision, ‘if there is no spin off, PAL will close down and 7500 workers will be displaced without separation pay’, not to mention its adverse effects on PAL’s shareholders, the riding public and public interest,” Cielo Villaluna, Spokesperson. Source: Philippine Airlines, 01-Nov-2010.

PAL Employees' Association: “We stand to lose our jobs, and many of us have invested our lives [in] the airline. The president can always reverse the unlawful decision, because the labour department is an extension of his office,” Gerry Rivera, President. Source: AFP, 02-Nov-2010.

Flight Attendants’ and Stewards’ Association of the Philippines: “We deeply lament that PAL management decided to push through with the drastic spin-off measure, unmindful of how it will affect the lives of 3000 workers and their families,” Company Statement. Source: GMANews.TV, 02-Nov-2010.